Over the last few weeks, I have had multiple conversations concerning pricing homes with sellers. 

Pricing Homes this Summer Correctly for the Market

Historically, the standard practice of agents is to determine the value of a home today by looking at the homes that have most recently been sold, with homes sold in the last six months receiving the most weight.

Sellers want to list their house at what it would have listed a couple of months ago. That is just not realistic in today's market.

Many sellers are frustrated watching their neighbor's home sell for considerably more, even when their neighbor's house was not as large, did not have as many upgrades, and was not nearly as nice as their home.

frustrated

It is important to remember that homes that have just closed were listed a few months ago when properties were still selling for the above-list prices.

The practicality of the situation does not seem fair. Sellers naturally feel their house is not worth as much now - that they missed the boat. That is a tough pill to swallow.

The Buyers' Minds

Since recently coming out of a red-hot market where houses received multiple offers within hours of going live, buyers have become conditioned to believe any property on the market for over two weeks has something wrong with it or is overpriced.

cautious

 

History Making in the Housing Market

I have been in real estate for nearly 20 years. This market shift is different than anything I have seen before. We are not weighing comps from the last six months as heavily because of the drastic transformation of the market.

I have witnessed some downturns in the market before; 2008, the housing market crash, 2012, the great housing rebound, and 2018 when interest rates were at 5%. Through all these years, the fundamental rules for the market still applied.

However, this market is unlike anything in the past. COVID flipped everything upside down.

We are seeing now that if your neighbor's home just sold for $1 million, you will likely be starting 10% lower - which is where your neighbor's house should have sold.

Learning Experience for Realtors

Realtors across the nation received a tremendous learning experience recently.

About a month and a half ago, the market began shifting, the stock market started going crazy, and gas prices soared; we were still operating in real estate as "business as usual."

During that time, homes on the market had been in the pipeline for up to 60 days - and the list price had been set. When real estate agents have set a price on a home, we can not come back to a seller a month or two later, once it is time to put it on the market, and say, "Sorry, you need to drop your price because I just have a bad feeling, and the news doesn't look good."

Homes were entering the market at elevated prices based on what had recently sold, and one of two things happened: we got lucky with a buyer that paid full price, or we almost got an offer but didn't, and the home sat.

For the homes that sat on the market, we had to make price reductions; some price reductions were successful, and some were not. However, I am confident we sold these homes for significantly more than they would have sold six months ago but less than they would have two months ago.

The Market is Evening Out

We are in a new market. Buyers do not have the appetite to set record prices, to escalate hundreds of thousands of dollars over the asking price - those days are gone. We are returning to a normal market, where buyers and sellers both see wins.

marketshift

Buyers are more cautious in this market and feel like the advantage is shifting in their favor. They are seeing more homes enter the market and seeing home prices drop. The buyer urgency is diminishing.

The Bottom Line

Pricing your home is vital. If you price your home correctly when you list, you will get activity, and your home will sell. If you price the home ambitiously in an attempt to be the highest selling home in your neighborhood, you may face some challenges.

IMG_0330 Click here to view my YouTube video - Summer 2022: Real Estate Market Update.

 

 

Khalil El-Ghoul

"Thanks for reading! I’m passionate about empowering home buyers and sellers with professional advice and unbiased information, throughout the real estate transaction. Unlike most agents, I always put clients first. When it comes to negotiating, marketing homes, and sealing the deal, I’ve got the experience and knowledge you’re looking for. If you have any questions about moving to VA, D.C., or MD, don’t hesitate to reach out."